Increase in rental-unit construction takes pressure off

The 160-unit Concordia Landing at Peguis Street and East Concordia Avenue is one of a few new apartment complexes going up in the city. Photo Store

The light at the end of the tunnel is getting a little brighter for Manitoba apartment-seekers, although it's still far from blinding, according to the results of the latest market survey by the Canada Mortgage and Housing Corporation.

In its Spring Rental Market Survey report released on Thursday, the agency said the overall apartment-vacancy rate in Manitoba and four of its six largest cities, including Winnipeg, inched a little higher over the winter.

Rates and renters on the move

HERE are the changes in the overall apartment-vacancy rates (%) for Manitoba and its six largest urban centres:

Centre April 2012 Oct. 2012 April 2013

Winnipeg CMA* 1.2 1.7 1.9

Brandon 0.7 0.0 1.0

Portage la Prairie 0.5 7.3 3.6

Steinbach 4.6 0.0 0.9

Thompson 1.1 0.0 1.6

Winkler N/A** N/A 0.5

Manitoba 1.2 1.6 1.8

* Census Metropolitan Area

**Not available

It said Manitoba's rate climbed to 1.8 per cent in April from 1.6 per cent in October and 1.2 per cent in April of last year.

And the rate for the Winnipeg Census Metropolitan Area (CMA), which includes Winnipeg and 10 neighbouring municipalities, rose to 1.9 per cent from 1.7 per cent in October and 1.2 per cent in April 2012.

The increases over the winter in the other urban centres ranged from 0.9 per cent to 1.6 per cent. The only city to see its vacancy rate drop was Portage la Prairie, where it fell to 3.6 per cent from 7.3 per cent last October.

But 3.6 per cent is still a lot better than it was in April of last year, when it only 0.5 per cent.

Dianne Himbeault, CMHC's senior market analyst in Winnipeg, said the CMHC still expects Winnipeg's vacancy rate to climb above 2.0 per cent next year for the first time in more than a decade.

"The (pattern of) slow, incremental rises will hold," she said, adding the vacancy rate is expected to reach 2.1 per cent by October of next year.

Himbeault has said it's difficult to say what would be considered a healthy vacancy rate for Winnipeg. But it's more than two per cent, she added.

The CMHC said a combination of factors are nudging Winnipeg's vacancy rate higher.

They include more rental units being built -- 557 of them between April of last year and April of this year -- more renters becoming homeowners and slower population growth in the last half of 2012.

Manitoba's vacancy rate is changing due to the same factors, though an increased outflow of Manitobans to other provinces has also been cited as a cause of more rental units becoming available.

The upswing in apartment construction has been one of the few pieces of good news for local renters in recent years. At least 800 new units have been added in Winnipeg in each of the last four years, including 844 in 2012.

But when you have a rental universe of more than 50,000 units, 800-plus new units isn't enough to produce a big change in the vacancy rate from one year to the next, Himbeault said.

B.C.-based Broadstreet Properties Inc. has been one of the most active apartment builders in Winnipeg over the past decade and it has two more projects on the go this year.

They are a 112-unit complex in the Bridgwater Forrest housing subdivision, and a 160-unit complex at the corner of Peguis Street and East Concordia Avenue.

Broadstreet's development manager, Kris Mailman, said the company hopes to tackle another new project in 2014.

"But we have to find a site before we can do anything," he said. "We're actively looking right now."

Although the vacancy rate is rising, Mailman said the increases haven't been significant enough to deter Broadstreet from building more new rental units.

CMHC said vacancy rates aren't the only thing on the rise in Manitoba. The combination of low vacancy rates and strong demand have also been driving up rental rates.

For example, the average monthly rental rate for a two-bedroom apartment in Manitoba rose by 3.5 per cent to $912 in April from $876 in April 2012.

In Winnipeg, it increased by 3.6 per cent to $939 from $901.

Although the provincial rent-control guideline for 2013 allows only a one per cent rent increase, Himbeault said there are a number of exceptions that allow for larger increases. For example, units renting for more than $1,140 a month are exempt from the guideline, as are units that have been extensively renovated.

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